Anti-Monopoly Authorities for Monopoly Rights

Anna Shmalyuk
Intellectual Property Specialist
Capital Legal Services

Until recently it was anything but simple for a bona fide manufacturer to cope with having its intellectual property stolen. Owners of pirating companies made good money by taking over other companies’ names and brands. For instance, owners of the world famous coffeehouse Starbucks’ trademark had to fight for the rights to their own trademark in Russia for almost four years.

The law on protection of competition enacted in 2006 has become a helpful tool for lawful businesses. According to the above law, any actions aimed at gaining advantage in business activities inconsistent with Russian legislation, as well as normal business practices including bona fide, common sense and fair play principles, which have caused or may cause damage to other competing business entities or harm to their business reputation, are deemed unfair competition.

Moreover, sales, exchange or other introduction of goods to the market are not allowed if the results of intellectual activities and means of identification of a legal entity, products, works or services — such as company names, commercial names, trademarks and appellations of the origin of goods — are unlawfully used for such a purpose. Competition regarding fraudulent acquisition and use of exclusive rights to means of identification and misleading consumers about goods or their manufacturer is also banned. In particular, the latter provision allows manufacturers, even if they do not possess registered trademarks, to appeal the use of similar designations by their competitors, if such actions may be qualified as unfair. Nevertheless, such cases are considered to be the most complicated, as the applicant has to prepare solid evidence for its claim.

The power to protect monopoly rights to intellectual property violated in connection with unfair competition has been vested in a specially established state body — the Federal Anti-Monopoly Service (FAS), as well as in the courts.

The FAS is authorized to reveal violations of the legislation on competition independently by means of inspections but, in most instances, cases of infringement on intellectual property are initiated following the application of an individual or a legal entity. Cases are then considered in an administrative procedure that lasts about four months, but this term may be extended.

In addition to the resulting decision, the FAS issues specific instructions to rectify violations or to restitute the state of affairs existing prior to the violation and may impose a fine from 100,000 ($3,359) to 500,000 rubles for legal entities or, in the event goods are introduced to the market unlawfully using intellectual property, from 0.01 percent to 0.15 percent of the infringer’s revenue from sales of the goods in question.

The resulting fines may be quite considerable. For instance, the Slavyanka confectionary plant was fined more than 3.5 million rubles by the FAS for using another company’s trademark on the packaging of a chocolate product, and the managing company of the Bank of Moscow was fined more than 7 million rubles for unlawful use of Olympics symbols, namely for including “SOCHI 2014” in the name of a fund. It is often possible to reduce the size of fine by appealing the FAS decision in court.

In the event that a violation is rectified voluntarily, the case may be dismissed. A case may also be dismissed based on a final court decision on the existence or absence of a violation of the anti-monopoly legislation in the actions under consideration.

In order to initiate a case, one needs to provide, apart from the application, additional materials that are evidence of an infringement of the above law — in particular, samples of the infringer’s goods and evidence of the fact that they are put on market in Russia. Advertising catalogs and photographs of the goods can also be submitted. Additionally, public opinion polls and expert opinions may be provided.

In the event that the right to a firm name is violated, evidence may be presented in the form of an extract from the Uniform State Register of Legal Entities confirming the registration of the disputed firm name, copies of statutory documents, corporate letterhead and advertising booklets, in which the firm name is used by the infringer.

Recognizing actions related to acquiring rights to means of identification as unfair competition is an important power vested in the FAS. Pursuant to the relevant FAS decision, the applicant may file an objection to a registered trademark with the Federal Service for Intellectual Property. Such an objection is examined by the Federal Service for Intellectual Property as to its compliance with the requirements both to form and substance. It should be noted that many objections are not accepted for examination because of being inconsistent with the formal requirements. When examining objections on their merits, it is made clear whether the FAS has established the fact of a violation of the legislation on competition expressed as fraudulent registration of a trademark, and the list of goods and services in respect to which the protection of trademarks must be invalidated is then determined. The Federal Service for Intellectual Property is not authorized to dispute any decision made by the FAS.

An applicant seeking protection from unfair competition can apply both to the FAS and to court. Filing applications on similar grounds to both authorities simultaneously is not recommended, as it may lead to a significant protraction of the examination procedure or to a conflict of law if the decisions adopted are in conflict with each other.